Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 1

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Prepare for the Certified Apartment Portfolio Supervisor Exam with flashcards and multiple choice questions. Each question provides detailed explanations and hints to enhance your learning. Excel in your exam endeavor!

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What is a key feature of tax-free bond financing?

It comes with no repayment terms
It allows for financing at or below market rates
It is exclusively for high-income earners
It requires government approval for each transaction

The correct answer is: It allows for financing at or below market rates

A key feature of tax-free bond financing is that it allows for financing at or below market rates. This is primarily because the interest earned by the bondholders is exempt from federal income tax, and in some cases, state and local taxes as well. This tax exemption creates an incentive for investors to accept lower interest rates. As a result, municipalities and other entities issuing these bonds can obtain funding at more favorable terms, making it easier for them to finance projects such as infrastructure or public services. The other options do not accurately represent the nature of tax-free bond financing. While repayment terms exist for these bonds, they are not typically characterized by the absence of such terms. Furthermore, tax-free bonds are available to a wide range of investors, not exclusively to high-income earners, and they do not require government approval for each transaction, although certain tax-exempt bonds must follow regulations set by the government. This makes option B the clear choice regarding the core feature of tax-free bond financing.